Core Leadership Principles: A Q&A With Jack and Suzy Welch

CNBC.com

Thursday, 2 Jun 2011 | 6:13 PM ETCNBC.com

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Jack and Suzy Welch recently dropped in on a few Fortune 500 companies to work with their top executives. There, the former General Electric CEO and his wife, a noted business journalist and best-selling author, engaged company leaders in their famous “work-out” sessions. It was all caught on camera and became the basis for CNBC’s new series “It’s Everybody’s Business with Jack & Suzy Welch.”

Jack and Suzy sat down with CNBC to talk about their core leadership principles, the lessons they’ve learned from work-outs, and how executives around the globe can implement these business basics to make their companies more competitive. Here, they share their insights:

Q: Executives are used to doing certain things a certain way, and sometimes they resist change. How do you get people like that to embrace change?

Jack: Look, in order to get change in a company, you’ve got to get a message out, as to what’s in it for the company, and most importantly, what’s in it for the people you’re asking to change. Too many people talk about change, for change’s sake.

Suzy: In the show, each company has people with entrenched interests. And they really didn’t want to change. They came to the table saying, this is the way it should be, there is no need for change, or the change should be the way I want the change to be. And the challenge was to get everybody to a place where the change was right for the whole organization. That was the real challenge.

"Over and over again we keep finding the big mistake executives make in talking about change is they don’t explain clearly enough what’s in it for the people."-Former CEO, General Electric, Jack Welch

Jack: But you know, over and over again we keep finding, the big mistake executives make in talking about change is they don’t explain clearly enough what’s in it for the people. When they understand it’s better jobs, better careers, better salaries, more stability, better community, all of that stuff, and explain why it has to happen, and what’s in it for them, we know that works.

Suzy: We definitely saw with the show that people started off in a position of not knowing what was in it for them. And after a lot of wrestling with the issues they did find out why the change had to happen.

We’re talking about organizations, about companies, but in the end, as you point out, it’s really all about people.

Jack: Everything about business is about people. I mean, big strategic meetings come down to who can execute. Who can grab it. Who can turn a vision into action and go after it.

Suzy: And what we found, when businesses were stalled, it was because people weren’t talking to people. People didn’t realize ways to connect — whether they were going to need to connect through technology or connect through conversation or just get into each other’s shoes to understand what the other party was experiencing.

It’s Everybody’s Business with Jack & Suzy Welch -- Presented by Microsoft -- See Show Details

Jack: What’s that phrase you used the other day, when we were with those executives about communication?

Suzy: The George Bernard Shaw quote: ‘The single biggest problem in communication is the illusion that it has taken place.’ And so people were not communicating with each other, and if people aren’t talking, business stops.

Jack: And once they get it, once they drive it home, people, generally people with the same information reach the same conclusion. The problem is they come with different pieces of information, and don’t communicate enough about it.

The Importance of Rewarding Executives

How important is it to identify and reward a company’s top employees? Why is that such a key to success?

Jack: People need to be recognized for what they do. Rewards have to come in the soul with good jobs, and in the wallet. If you forget the wallet, you don’t quite get the same result.

The bigger the company, the bigger the bureaucracy. How do you cut the bureaucracy to help the company succeed?

Suzy: Even small companies have bureaucracy, that’s the crazy thing. I mean, if you put 10 people in a room, bureaucracy starts occurring. So, of course, big companies have it in massive amounts, but you find it in every company.

The way to stop bureaucracy is to name it when you see it, say ‘that’s bureaucratic.’ Sometimes you have to use a sense of humor, candor. But if you see bureaucratic behavior you have to be able to say, out loud, with the OK of the very top levels, ‘that’s really bureaucratic. You’re slowing us down. That’s just make-work.’ It’s everywhere in business, the lack of candor, the prevalence of bureaucracy that really slows people down.

Jack: And layers. One thing you want to get rid of in a corporation, is layers. I report to you, you report to him, he reports to somebody else. Every time a message goes through a layer, it’s twisted in another way. So you’ve got to make layers evil. And you’ve got to find where they are and flatten the organization. The flatter the organization, the faster it is, the clearer the message, and the better the execution.

Welch Workout: Worst Mistakes Managers Can Make

Successful leadership is all about mobilizing your team and moving quickly, say Jack and Suzy Welch.

Why is it so important to give every employee in a business a real voice?

Suzy: A lot of companies say they give people voice. I mean, you see it all the time on a plaque on a wall that everyone’s got a voice. Companies really change — business really changes — when people do have voice, when everybody gets to bring their knowledge to the table. We’re not talking about just blabbing about whatever you feel, but really bringing the kinds of ideas and information to the table that change the game.

Jack: And people will do that as long as they believe you’re listening, you care, and they’re rewarded for doing it. You get the behaviors in business that you reward. If you reward more ideas, you’ll get more ideas. If you reward bureaucracy, you’ll get the fattest bureaucracy in the world.

Is there any such thing as a bad idea?

Jack: Oh yeah. And I’ve had plenty of them. They’re all over the place, bad ideas. Bad ideas are everywhere and your job — one of the jobs of a manager — is to sift through all the ideas, to come up with the best one.

Suzy: Sometimes in bad ideas there are germs of good ideas, so all the ideas come out, and you sort through them. But no, not all ideas are good ideas.

How can an average business owner or a CNBC viewer benefit from watching your workouts?

It’s Everybody’s Business with Jack & Suzy Welch -- Presented by Microsoft -- See Show Details

Suzy: Good business is universal. Good business practices are universal; that’s why the term “best practices” exists. I think this is one of those cases where it’s like watching a movie and you come out of it and you feel like the movie was actually about your family. In these programs, what you see are businesses wrestling with the problems of business that are quite specific in their detail but completely universal from 20,000 feet.

Jack: Workout is generic. Whether it’s a new start-up in a car rental company, a pizza company, a well-established, brand-name beverage company, the process is the same. So any viewer watching it can see the benefits of getting every voice in the game, and bringing their ideas to the surface.

This is business. This is best practices. Work-out is a great idea. People should be practicing it all over the place. It should be a way to generate new enthusiasm, new ideas, new teamwork to enhance the direction the company’s going.

Suzy: I think you can look at this and think, we’ve had this intractable problem in our company, we have not been able to get past it and you could walk away from this, and actually think, ‘oh, there is a way we can change.’ I think it’s quite instructive in that way, that it does show you how you can get unstuck.